Apple and Samsung are the smartphone market leaders in the USA and Europe. But alternatives from China have been gaining ground and offer high-end devices at utopian prices. How is this possible and how good are these devices compared to the market leaders? // By Timur Vardar
Who would trade their american Tesla for a chinese e-car like "BYD Auto"? For most people the situation is similar concerning smartphone manufacturers Apple and Xiaomi. Well, okay, the comparison is a bit loose. Unlike car manufacturers, there are often no local productions of technical devices. Even Apple's well-known lettering "Designed in California" doesn't hide the fact that their products are made in a Chinese factory of the Taiwan company Foxconn. It is the same company that manufactures devices for Intel, Microsoft and Amazon but also for Chinese alternatives like Huawei, Xiaomi or Oppo phones. Foxconn is notorious for its poor working conditions.
An article of Focus Online mentions "excessive and compulsory overtime, miserable wages, military management and humiliating punishments". If you do not want to support this kind of employers, there are alternatives like the Fairphone or the Shiftphone. These two devices are manufactured in a transparent and sustainable process. Both companies promise fair wages, working hours and working conditions.
What defines the value of an iPhone?
With a price of 1,650 Euro (20.04.19) the iPhone Xs Max is one of the most expensive smartphones of all time. Using the official Apple website to make the purchase, you will notice that a surcharge must be paid to obtain more data storage. Therefore, it costs an additional 400 Euros if you want to have 512 gigabyte (GB) instead of the default 64 GB memory installed. If you compare this with smartphones where an external SD card can be added, you probably can see that the surcharge is disproportionately high - the price difference between a 64 and 400 GB memory card is about 54 Euros. Even in the version with the least memory and the smallest display, the new iPhone still costs over 1,000 Euros.
The production costs of an iPhone X are about 376 Euros high, thus about a quarter of the purchase price. Through good groundwork, Apple has developed a unique selling proposition that allows them to sell the devices at such high prices. With an almost flawless working touchscreen and an efficient firmware design, the "iPhone 2G" laid the foundation for all smartphones as we know them today. In addition, their excellent marketing strategies got the company a high reputation, enabling them to sell their devices as luxurious prestige items. Jörg Wirtgen is Head of Department of the c't magzine and thinks Apple has a high level of brand loyality, because they do all right in marketing:"Great hardware, high-end image, but still cool, tolerant, stubborn, not dusty. They often go their own way with design and technology. And thanks to high prices they only have to make a few technical compromises."
Profit margin to a maximum of five percent.
In contrast, new Chinese companies offer smartphones at a price of 80 Euros and upwards. One would assume that these must have much worse hardware than other established smartphone brands like Samsung or LG. However, Huawei recently showed that they are ahead of the game when it comes to innovations and installed a "groundbreakingly" camera in its new P30 model.
The Chinese brands can offer devices at such low prices, since their profit margin is significantly lower than the established brands. In the case of Xiaomi, the CEO promised to keep the profit margin at a maximum of 5 percent (after taxes).
Viviane Osswald, volunteer at Chip Online, thinks "For a long time, China mobile phones had (and have) the image of a "cheap mobile phone" - although there are hardly any hardware differences to devices from Samsung or Apple. The lower price didn't help this image either. Many prefer overpriced prestige mobile phones like iPhones". Her explanation for the "attractive" prices is that Chinese manufacturers manage to save money in the right way. "Best example: Xiaomi Pocophone F1. That doesn't have an OLED, but a good LCD and therefore a relatively good battery life," said Viviane Osswald.
Market share of the largest smartphone companies
The concept of low-cost smartphones has led Xiaomi, Huawei and Oppo to grow into serious competition for Apple and Samsung. A study by the International Data Corporation (IDC) shows that Huawei already has a larger market share than its Californian competitor.
Comparison of an iPhone and a cheap chinese brand smartphone
Everyday usage test with both devices
When it comes to battery life the Pocophone is slightly ahead. Both devices got used the same way and while doing similar activities (e.g Wi-Fi on, increased brightness, surfing the web, listening to music). The iPhones battery achieved a test result of 9 hours, while the Pocophone’s lasted for 13 hours. Here the statement of Osswald is confirmed. Thanks to clever savings, the Pocophone has an excellent battery life.
While writing messages, playing mobile games, surfing the web or watching videos, both devices had equivalent performance. Both, the iPhone Xs and the Pocophone F1 offer a clean and smooth user experience.
This test is a subjective evaluation of the author and serves as orientation. Technikjournal does not give any concrete purchase recommendations.
Chinese brand smartphone could be an alternative
The evaluation showed that even smartphones for less than 500 Euros can offer a great smartphone experience. Even the 300 Euros Xiaomi has high-quality hardware in it. Jörg Wirtgen says: "The Chinese devices are technically as good as the others, partly because they are manufactured in the same factories. Especially the devices about 400 Euros are super exciting, because many of them offer so much that you have to be stupid to spend three times that amount."
But it should be noted that many Chinese manufacturers do not offer direct customer support in Germany yet. Huawei is an exception, since they have their European headquarters in Düsseldorf. Martin Wieler from the Consumer Center NRW in Siegburg warns about buying via Chinese websites. For the most part there is no buyer protection. Even those who choose PayPal as their payment method are not necessarily protected. He also warns about custom duties which can rise the price of a Chinese mobile phone.